Medical Debts Now Surpass All Others, and Likely Shorten Lives

July 30, 2021

Medical Debt in the US, 2009-2020.
JAMA
July 20, 2021
By Raymond Kluender et al.  

Data … were obtained from a nationally representative 10% panel of consumer credit reports between January 2009 and June 2020 (reflecting care provided prior to the COVID-19 pandemic). . . 

An estimated 17.8% of individuals had medical debt (13.0% accrued during the prior year), and the mean amount was $429 ($311 accrued during the prior year). The mean medical debt was highest in the South and lowest in the Northeast ($616 vs $167; difference, $448) and higher in poor than in rich zip codes ($677 vs $126). Between 2013 and 2020, states that expanded Medicaid in 2014 experienced a decline in the mean medical debt that was 34.0 percentage points greater (from $330 to $175) than the states that did not expand Medicaid (from $613 to $550).

Association of Wealth With Longevity in US Adults at Midlife.
JAMA Health Forum
July 23, 2021
By Eric D. Finegood et al.

Higher net worth was associated with lower mortality risk (hazard ratio, 0.95). Among siblings and twin pairs specifically, a similar within-family association was observed between higher net worth and lower mortality (HR, 0.94), suggesting that the sibling or twin with more wealth tended to live longer than their co-sibling or co-twin with less wealth.

Comment by David Himmelstein and Steffie Woolhandler

In a series of studies dating back 16 years (see: here, here and here), we and our colleagues found that illness and medical bills are a leading cause of bankruptcy.  Those findings, based on court records and surveys of debtors, have been derided by scholars funded by the health insurance industry (see our response to them here), and by leading health economists.  Those critics have claimed that debtors can’t accurately identify the causes of their financial ruin, and have turned instead to statistical analyses that rest on unwarranted assumptions about who incurs medical debts and when those debts begin to accrue.

Kluender et al document the extraordinary frequency and size of medical debts.  Even prior to the COVID-19 pandemic, more than one out of six Americans with a credit record had a medical bill in collection, with medical debts totaling about $140 billion – more than the total amount of all other debts in collection.  As the authors acknowledge, that figure surely understates the magnitude of medical debts, e.g. it excludes medical bills charged to credit cards.

Kluender et al find that states that implemented the ACA’s Medicaid expansion reduced medical debts relative to non-expansion states.  Yet even in expansion states Medical debts accounted for the majority of all debts in collection.

Finegood et al’s study suggests that debts have health as well as financial consequences.  Even among genetically identical twins, lower net worth (assets minus debts) is a predictor of earlier death.

When journalist TR Reid asked policy leaders in other developed nations about the frequency of medical bankruptcy in their country he was generally met by blank stares; medical bankruptcy was virtually unknown.  It’s high time that the US join the civilized world and abolish medical debt by implementing universal, first dollar health coverage.